W-2/K-1 reconciliation for QBI when reporting on personal income tax return?

[JamesC]

I have a client that is a partner in a small attorney partnership. My client opted to have his distributions from the partnership flow through payroll, thus payroll withheld taxes on behalf of my client. Payroll issued my client a W-2 at the end of the year showing all payments and taxes withheld. This presents two problems. First, my client and wife's 2018 income is under $315,00, thus he believes that the income received through his partnership should qualify for the full 20% QBI deduction. However, all of his income flowed through payroll and a corresponding W-2 was issued by the partnership to my client. He wants to know if W-2 "wages" can qualify for the QBI deduction, if so, how do I, in turn, reflect the same in Lacerte? Second question, how do I reflect the W-2 "wages" and corresponding tax withholding in the partnership tax return on the K-1s? 

Any guidance is well received. 

[George4Tacks · Accepted solution]

Third problem - How can you have a partner be an employee? Sounds like the partnership needs to redo some payroll returns and the partnership return. This make the other two questions less of a problem. 

[JamesC]

The now partner was previously an employee and previously received W-2s. Upon becoming a partner, he failed to have payroll stop processing payments and withholdings. This happened for all of 2018, however, was corrected for 2019 and he will only receive a K-1 for this tax year.